All posts tagged drinks

Some good news for the Kentucky whiskey business: Diageo, the U.K. spirits maker that owns global mega-brands including Johnnie Walker as well as Kentucky bourbon label Bulleit, is making a big investment in the state. From a company announcement today:

Diageo today announced its intention to invest an estimated $115 million over three years to build a 1.8 million proof gallon (750,000 9-liter cases) distillery and six barrel storage warehouses in Shelby County, Kentucky. While finalization of these plans is still subject to approval by local government, the project will represent a significant investment in Kentucky’s growing bourbon industry. The proposed facility will distill a number of current and future Diageo bourbon and North American Whiskey brands.

It will be Diageo’s first active distillery in Kentucky, although it also owns the historic Stitzel-Weller distillery, which it recently opened to visitors on bourbon tours of the region.

Diageo’s $115 million investment will go a long way in Shelby County, but what does it say about the state of the bourbon market? It’s currently the fastest-growing category of spirit in the U.S., Diageo says, and there has been a flurry of cash pouring into the business, from Suntory’s $13.6 billion acquisition of Jim Beam maker Beam Inc. to Brown-Forman Corp. announcing a $35 million expansion of the distillery producing Woodford Reserve Bourbon. More on this after the jump… Read More »

If you want to make Roquefort cheese in the European Union, you need to play by the rules, which include gems like ”delivery to the ripening cave must take place within two days.” If you want to wrap the cheese, ”protective wrapping takes place only in the caves”.

If all that doesn’t deter cheesemakers who lack quality cave access, here’s a higher bar: All Roquefort must be “aged, stored, cut, conditioned, pre-packed and packed exclusively in the municipality of Roquefort-sur-Soulzon.” The village of Roquefort has a population of 679.

These kind of regulations are common in the food and drink business, but as the WSJ’s Mike Esterl reports today, a controversy is brewing in Tennessee over a state law passed last year that set tight standards for what you can legally label as “Tennessee Whiskey.” The law, it turned out, happened to mandate what is essentially the recipe for Jack Daniel’s.

That topped Coca-Cola Co. by a few hundred million dollars at one point, temporarily displacing the Atlanta-based maker of Minute Maid juices, Powerade sports drinks and namesake cola from its decades-long perch atop the beverage industry.

By Wednesday’s close, after AB InBev surrendered some of its gains, Coke had reclaimed the mantle for at least one more day. AB InBev ended 1.6% higher on the New York Stock Exchange at $103.75 a share and a market capitalization of $166.83 billion. Coke ended up 0.3% at $37.87 and a market capitalization of $166.86 billion.

Beer isn’t a big-growth industry at the moment. In fact, AB InBev said Wednesday its beer volumes dropped 2% last year while Coke reported last week that its beverage volumes – which also include bottled water and teas — rose 2%.

Coca Cola K-Cups are on the way, according to an announcement today from Keurig-maker Green Mountain Coffee Roasters and the Coca Cola Company.

Coke is spending $1.25 billion to buy a 10% stake in Green Mountain, which is planning to introduce a new home soda maker to go alongside its Keurig single-serve coffee makers. And Coca Cola’s drink brands — Coke, Fanta, Sprite, Powerade and many more – will be making appearances in the new machines.

Here’s some of the announcement.

The Coca-Cola Company and Green Mountain Coffee Roasters, Inc. announced today that the companies have signed a 10-year agreement to collaborate on the development and introduction of The Coca-Cola Company’s global brand portfolio for use in GMCR’s forthcoming Keurig Cold at-home beverage system.

Under the global strategic agreement, GMCR and The Coca-Cola Company will cooperate to bring the Keurig Cold beverage system to consumers around the world. In an effort to align long-term interests, the companies also entered into a Common Stock Purchase Agreement whereby The Coca-Cola Company will purchase a 10% minority equity position in GMCR.

Under the terms of the equity agreement, The Coca-Cola Company will acquire 16,684,139 newly issued shares in GMCR for approximately $1.25 billion, which represents an approximate 10% ownership in GMCR.

Demand for pricier whiskeys, tequila and rum fueled U.S. alcohol sales last year, a spirits trade group reported, helping the category steal more market share from the beer industry for the fourth straight year.

The Distilled Spirits Council of the United States, also known as Discus, reported sharp increases in 2013 volume for Irish whiskey, Scotch, bourbon and Tennessee whiskey, as well as other so-called brown spirits.

That growth isn’t entirely surprising. Brown spirits have become more popular in recent years, courting favor with some consumers that have tired of vodka, the top-selling U.S. spirit. Distillers like Beam Inc. and Jack Daniel’s maker Brown-Form Corp. are investing more to boost capacity.

Japan-based beer and soft-drinks maker Suntory Holdings Ltd. was recently so lured by the category that last month, it agreed to pay $13.6 billion to buy Beam, owner of Maker’s Mark and the eponymous Jim Beam.

And just a few weeks later, Diageo is making another purchase, this time buying another small producer of premium tequila. Via the WSJ’s Ian Walker:

Drinks company Diageo is buying the tequila brand Peligroso just weeks after acquiring the luxury brand DeLeon in a joint venture with rapper-turned-businessman Sean Combs.

The company didn’t disclose the amount it agreed to pay California-based Peligroso Spirits Company, LLC for its namesake brand.

“Acquiring Peligroso is part of Diageo’s strategy of creating a collection of superb quality and distinctive tequilas at complimentary price points to appeal to a wide range of consumers,” said Larry Schwartz, president of Diageo North America.

Why the flurry of tequila deals? Firstly, for Diageo this is a case of playing catch up in a market where it is unusually weak.

Mr. Timberlake is teaming up with Beam Inc., parent of Maker’s Mark and Jim Beam, to co-brand a premium-priced tequila called “Sauza 901,” part of a growing trend in recent years to offer consumers pricier tequilas that pack more unique flavors. The announcement comes a day after rival Diageo PLC announced plans to move upmarket in the tequila category with the help of Sean “Diddy” Combs.

“I’m a big tequila fan,” Mr. Timberlake said, though in his 2013 song “Drink You Away” he sings about trying “Jack, Jim,…all of their friends” —suggesting he may be a bit of a spirits aficionado.

Another hip-hop mogul, another luxury spirit brand you can expect to see popping up in video clips and snippets of our culture in the coming years: Sean “Diddy” Combs is in a new joint venture with UK drinks maker Diageo (Johnnie Walker, Smirnoff, Guinness etc.) to buy DeLeón, a high-end tequila brand.

You can find bottles of DeLeón selling for north of $1000 in Hollywood bars, but it’s still a tiny part of the U.S. booze market. Expensive tequila ($60 a bottle and higher) makes up just 0.6% all tequila sales in America.

DeLeón has a long way to go if it is to be considered a success. Made from the blue agave plant in the Jalisco region of Mexico, the brand sells fewer than 10,000 nine-liter cases a year and is distributed only in 18 U.S. states. Annual tequila sales in the U.S. top 13 million cases, according to data from International Wine & Spirits Research.

But Diageo and Mr. Combs have experience in transforming little-known spirits brands into winners. In 2007, the two began developing Cîroc, an upmarket vodka. In six years, the brand has grown sales from 50,000 cases a year to nearly two million.

Brown-Forman Corp. Chief Executive Paul Varga said Wednesday that, despite recent success, the spirit maker plans to take a “conservative” approach in rolling out new flavors for its whiskey.

The brand has been a central driver in Brown-Forman’s earnings growth thanks to surging global demand for bourbon and whiskey. In addition, Jack Daniel’s Tennessee Honey–a flavor introduced in 2011—-has propelled sales, especially as the company ships the new flavor to more countries. That strength continued as the company on Wednesday reported stronger-than-expected fiscal second-quarter results.

Care for a fruity blackcurrant drink? Until today, one of the world’s largest pharmaceutical giants could have helped you out.

GlaxoSmithKline pulled in $41.4 billion in revenues in 2012, more than $28 billion of that from its core pharmaceuticals unit. The rest — about 32% of the total — came from vaccines and consumer healthcare products including Aquafresh toothpaste and Nicoderm nicotine patches.

But it also owns two drink brands that are more at home in a supermarket fridge than a drugstore — or it did own them, until a deal struck today.